Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations

We compare the geographic location of patent citations with that of the cited patents, as evidence of the extent to which knowledge spillovers are geographically localized. We find that citations to domestic patents are more likely to be domestic, and more likely to come from the same state and SMSA as the cited patents, compared with a “control frequency” reflecting the pre-existing concentration of related research activity. These effects are particularly significant at the local (SMSA) level. Localization fades over time, but only very slowly. There is no evidence that more “basic” inventions diffuse more rapidly than others.